PowerBoston

The power industry is one of the world’s largest industrial segments. With a market share of approximately 25%, the United States is the leading producer of electricity, followed by China, Japan and Russia. Global electricity consumption grew at an annual rate of 3.1% from 1980 to 2006, according to the Energy Information Administration of the DOE. Over the same period global installed capacity increased at a slower rate of only 2.8%.

Recent figures are not as robust. Last quarter, Centerpoint in Houston reported a 1% increase in residential electricity use, but an overall 8% reduction in electricity use in their service area, attributed to a slowdown in new construction and a similar retrenchment in the local oil and gas business.

Transmission upgrades provide the best area of growth for electric utilities, as the investment has a guaranteed rate of return and location of new supply and load are divergent.

National Grid and Bangor Hydro-electric are investing US$2.0B in joint venture to bring renewable resources to eastern Massachusetts from supply in Maine and Canada. National Grid has 5,565 MW of renewable energy projects in the interconnection queue: 4,617 MW of wind, 113 MW of biomass, and 835 MW of hydro, of which 666 MW consists of new pump storage.

The Northeast Energy Link would comprise 220 miles of 660 MW High Voltage Direct Current (HVDC) transmission from Orrington, Maine to eastern Massachusetts. The project would include a phase shifter and AC-DC converter at Orrington and a DC-AC converter at the Massachusetts terminal. The project is designed to be expandable to 1,200 V DC, with an in-service date of 2012. Recovery approval for the investment has not yet been sought by the joint venture.

Once built-out, the project will facilitate fuel diversity and greatly increase supply of northern New England generation into the eastern Massachusetts zone, including Boston. Transmission thermal losses will be minimized by the use of HVDC.